S&P
Post-open Review… That was then, this is now.
Overnight bounce fails, fulfilling sellers.
Several potential recovery patterns were trying to form ahead of this morning’s open. Ultimately, either they didn’t form, or didn’t trigger.
The 2750.25 overnight high stopped 2 points short of piercing yesterday afternoon’s high, whose opening recovery would have formed a “session-long rally” setup. 
The Head & Shoulders broke lower, instead of higher. And opening back within yesterday’s range had isolated the overnight probe under yesterday’s range, but it has been retested already.
Also, the 2738.50 bias-up signal held its test, putting into play an offsetting test of the 2720.00 bias-down signal.
All of which is potentially bullish: Never actually probing yesterday afternoon’s high means the session-long rally never formed, so it was never rejected. The Head & Shoulders target was met. And the Isolation setup may be forming elsewhere this morning.
The bias environment was entered above yesterday’s low at 2737.50-2740.00. Exiting the bias environment back above its entry would isolate its probe under yesterday’s low. Similar to the overnight Isolation setup, but not optimal. So, its reward would still be a retest of last Wednesday’s highs, but the recovery must produce fresh highs today.
Already, the 2738.50 bias-up signal is being retested. So, the opportunity to bottom is being exploited, but there’s also a narrow window. There’s a big reward to bottoming, but there’s also a big consequence to not bottoming — 2685.00.
The First Trade & Pre-open Tour Recording… Delayed reversal?
Proper context can start the day with a solid win and make all the difference.
DAILY SCHEDULE
First, watch the pre-open Tour recording HERE <<==
Then, meet in the chaRTroom here by 9:15 ET for updates and Q&A
Through the prior close…
Monday was the third consecutive downtrending session spent exclusively in negative territory. Sellers were refueled by an overnight rally to the morning’s 2795.50 bias-up target. But the open was already back down at its 2775.00 bias-down signal. The first hour collapsed to 2733.00, which supported a range back up to 2752.00 through the afternoon bias environment. The proxy window finally broke lower to 2722.00, retracing all of last of last week’s rally — before Wednesday’s election results surge, back down to the prior Friday’s close.
Overnight action’s new info…
A brief bounce resolved down to a fresh low at 2719.00, testing what is this morning’s 2720.00 bias-down signal. Not much lower, and also not extended, so easily retraced back up to 2745.00 by midnight. Its reaction down to 2733.00 was just retested, following an interim surge up to 2750.00. That is potentially the head of a Head & Shoulders pattern, with its neckline being 2733.00. The 2745.00 shoulder has been recovered, and is being probed almost too much to maintain the Head & Shoulders form.
If, then… (notes to accompany the Tour recording)
Overnight action contains multiple reversal patterns, waiting to be triggered, all of which can be ignored. Head & Shoulders: Dipping back under the Head & Shoulders 2733.00 neckline would trigger the reversal pattern, targeting a retest of at least yesterday’s lows, and potentially resuming the decline. The pattern doesn’t always reverse price action, and extending higher would entrench the overnight recovery. Leapfrogging over interim resistance at 2739.00-2743.00 at Tuesday’s open would be the quickest signal of rejecting Monday’s decline. Isolation: An Isolation setup would form by avoiding a dip back down to yesterday’s low since it was probed overnight. Session-long Rally: Maintaining and extending a gap up to and or through Monday afternoon’s 2752.00 high would form a session-long rally setup. Otherwise, resuming the decline could reach 2786.00 before its next opportunity to try bottoming again.
First Trade…
[Click here to view the Bias parameters] Exiting the open at 9:45 above 2743.00 would be likely to trigger the 2738.50 at 10:15. Exiting the open under 2733.00 would be unlikely to trigger bias-up.
Morning Bias
| TUE morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2737.50 | 2738.50 |
| …would target | 2745.50 | 2746.50 |
| Bias-down: under | 2719.25 | 2720.00 |
| …would target | 2712.25 | 2713.00 |
| Signal status: LATE NO-BIAS, TESTED BIAS-UP SIGNAL | . | |
| NEW: BIAS VIDEOS… INTRO // EXAMPLE | ||
1. At 10:15, trading above the bias-up signal or under the bias-down signal would put into play a test of its bias-up or bias-down target.
2. Not triggering either bias signal at 10:15 would be “no-bias,” and the bias signals should define the bias environment’s range.
— A test of the opposite bias signal would be targeted if one bias signal was tested before triggering no-bias.
3. Touching the bias signal within 3 minutes either way of 10:15 would invoke a grace period through 10:30 to trigger a late signal.
— “Late” signals don’t require testing the opposite bias signal, but it’s still likely.
4. Still testing the bias signal at 10:30 after invoking the grace period would trigger “noN-bias,” with no bias influence.
Market Wrap (recording & summary)
Two consecutive sessions spent downtrending in negative territory were likely to bleed into a third. Monday fulfilled the setup, despite having rallied overnight to the morning’s 2795.50 bias-up target. Opening back down at its 2775.00 bias-down signal was only the beginning of a collapse that erased the last of last week’s rally. Not just Wednesday’s election results surge, but also the Tuesday and Monday rallies preceding it down to 2722.00.
Those two days were also consecutive sessions spent uptrending in positive territory, which bled into a third — Wednesday’s election results surge. Their different context allowed Monday’s initial selling to bottom, and for its recovery to be rewarded by retesting Wednesday’s high. Which is still possible, to the degree that Monday’s decline is rejected.
Just recovering interim resistance at 2739.00-2743.00 would be a start. Leapfrogging over it at Tuesday’s open would be the quickest signal of rejecting Monday’s decline, especially maintaining and extending a gap up to and or through Monday afternoon’s 2752.00 high. Meanwhile, extending this leg could reach 2786.00 before its next opportunity to try bottoming again.
Details and other markets coverage are discussed in the post-market Wrap recording here.
Monitor overnight Globex trading in the chaRTroom here.
Daily Spot…
A daily summary of high-profile members of several complexes… View a more detailed discussion of each chart at the end of today’s Market Wrap.
Eurodollar Dec Contract (EC, ETF: (FXE, UUP))
Monday’s open gapped down under all prior lows and trended down intraday for the fourth consecutive session. The lower close already fulfills the minimum third lower close required by the confirmed breakout. But the persistent sentiment suggests bleeding into at least another session or more.
Gold Dec Contract (GC, ETF: (GLD))
Probing fresh lows overnight extended Monday to attack the 1201.50 objective, whose break would put into play 1172.50.
Silver Dec Contract (SI, ETF: (SLV))
Avoiding fresh lows overnight didn’t prevent resuming the decline Monday morning down to 14.00. Hovering at or above September’s low suggests “ineffectual optimism” that is bearish from a contrarian perspective. .
30-year Treasury Dec Contract (US, ETF: (TLT))
Having recovered from prior lows Friday up to the 138-04 buy signal, Sunday night easily began probing above it. But gapping up to 138-12 only fluctuated flat-to-higher, and has yet to actually rally.
Crude Oil Dec Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Gapping up above Friday’s low formed the basis of a reversal pattern, if it could be maintained and extended. Which it wasn’t. But at least its failure filled the gap back down to Friday’s close, so any initial strength Tuesday would be credible for extending higher intraday.
Natural Gas Nov Contract (NG, ETF: (UNG, UNL))
Already extending to fresh highs at 3.90 Sunday night was unsustainable, so Monday’s open gapped up only to test Friday’s highs around 3.80 and then range sideways. The “ineffectual optimism” makes any initial reversal down Tuesday likely to extend intraday, targeting 3.42.